The effects of neutron-irradiation near 80°C on the deformation behavior of hexagonal close packed (hcp) materials, zirconium and zircalloy-4, were investigated by transmission electron microscopy (TEM). Particular emphasis is placed on the deformation microstructure responsible for the changes in mechanical behavior. Neutron irradiation at low temperature up to 1 dpa induced a high number density of defect clusters, which resulted in irradiation-induced hardening. Dislocation channel deformation is observed for doses greater than 0.1 dpa, and is coincident with prompt plastic instability at yield. TEM analysis suggests that the loss of work hardening capacity in irradiated zirconium and zircaloy-4 at higher doses is mainly due to dislocation channels that are formed under a high local resolved shear stress, leading to the observed localized deformation.